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Zack’s Bull of the Day: Amgen

Biotechnology has been an extremely hot industry thanks to high demand for the sector and new drugs which are boosting revenues across the board. The space also generally has a pretty good pipeline of drugs that are ready to come on the market over the next few years, so the prospects for this in focus sector appear bright as well.

While many investors might focus on small caps in this corner of the market, large caps can also be great choices. These can also provide more stability, and even dividends, to investors who are looking for more established companies. One such company in this large cap corner of the market that appears well-positioned is undoubtedly Amgen (NASDAQ:AMGN). And though this company has soared along with the rest of the space, there are plenty of reasons to believe that more gains are ahead for this California-based giant too.

AMGN in Focus

AMGN is one of the largest biotechs in the market with a market cap in excess of $100 billion. The company has been an exceptional long term investment as well, with the stock doubling the overall market’s return in the past five years. Yet even with such amazing growth, there is plenty of reason to expect even better things from AMGN this year too.

That is because AMGN is expected to release half a dozen new drugs this year. While all still need regulatory approval, they could definitely move the needle for AMGN and provide the company with new growth opportunities.  

The company is also looking to grow dividends by 30% on the year while share repurchases will hit $2 billion. If that wasn’t enough, it is also worth noting that AMGN hopes to boost operating margins from their current level around 38% to over 52% by 2018, showing how committed AMGN is to creating long term shareholder value and keeping costs under control.

Earnings Estimates

Thanks to these factors, analysts remain very bullish on AMGN stock and many have revised their earnings estimates higher in recent weeks. This has helped to move both the full year and following year consensus estimates higher over the past few months to the point that AMGN is projected to see EPS growth of 13.5% for the current year.

But before you get too worried about AMGN living up to these lofty expectations, consider the company’s recent track record at earnings season. The company has beaten estimates by an average of just under 11% over the past four quarters, while it is riding a streak of seven straight beats as well.


Clearly AMGN knows how to match expectations and then some, even despite its incredible run up lately.

Bottom Line

For these reasons it shouldn’t be too surprising to note that AMGN has a Zacks Rank #1 (Strong Buy) and that we are looking for outperformance from this company in the near future. So if you are looking for a top stock in the biotechnology industry—with a solid dividend no less—make sure to take a closer look at AMGN.

 It has proven to be more than capable of living up to earnings expectations while it has a strong path to growth ahead suggesting that the run for AMGN might not be over just yet.

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